Investing in cryptocurrency: Is it worth it?
Another Bitcoin rally, another set of people interested in the whole investment aspect of the crypto market and wanting to jump in and enjoy the new gold rush.
The most common question asked about this, which makes sense, is whether there’s any money to be made investing money in crypto. The answer, though, is the same you’d give if they asked you if money can be made by investing in the stock market or local businesses: it is laced with meanings.
The Cryptocurrency Market: Like the stock or forex markets, but more volatile
Making money in any investment is a risky business. For every success story of overnight millionaires there are dozens of people with stories of losing everything due to a poor or ill-timed investment. The takeaway isn’t that you’re going to lose your money if you invest, but that you need to be extra careful about when you invest and what you invest in.
A part of the volatility of the market comes from the constant entering and exit of the fringe investors. The sort that dusts up their mobile apps to place orders when news about BTC price surge makes headlines. They are also the first to dash for the door when a slump sets in.
When you invest in local businesses, you have a contract stating how the business will be run and how much of the money it makes you’ll get – again, value. Even Forex investments have a certain value tied to the GDP of the country issuing the currencies. So, when you target a specific crypto, it is the future value you are envisaging and hoping to profit from.
The Best Investments? Not the ones you might think…
People who are new to crypto, or to investment in general, often make the mistake of chasing the current outlier or overperformer, the one that’s at the top, and hope to make a lot of money with it.
But things aren’t quite like that. Yes, people have made millions with Bitcoin investments. Yes, Bitcoin recently peaked at $61k/token, after being at $30k/token just six months ago. That’s a $30k earning per token, isn’t it amazing?
No, it isn’t. While a 100% ROI within six months is indeed great, the true value in crypto investments isn’t there. People will often see Bitcoin rising its value without actually thinking the relative change in the short term. Bitcoin today is a great investment for those who bought during the 2018 market crash, but it is hardly a decent investment at all for newcomers.
Instead, let’s look at smaller coins and their performance this year:
Bitcoin Cash went from $400 to $1400 this year, reporting a 250% ROI within six months.
Dash went from $91/token to $400/token within the same timeframe. 300% ROI in six months.
EOS went from a bit under $3 to a bit above $13 within that timeframe. Also 300% ROI.
NEO went from $17 to $111. A whopping 550% ROI.
XRP went from $0.29 to $1.56. 530% ROI.
Anyone who invested in any of those coins in January made more money than people who invested in Bitcoin or Ether during the same timeframe, even when those coins are all worth but a fraction of the bigger crypto.
The reason? Smaller tokens grow faster in value. Bitcoin gains $10k in value, and that’s only a 0.16% ROI. On the other hand, if Ripple goes from $1.56 to $4, the ROI is over 100%, even when the numbers aren’t quite as attractive.
Smart investors know this. They invest when low, not when high. They wait, bide their time. Smart investors will look out for the likes of Boliecoin, with a defined use case as a P2P value token that is fast and high on speed of processing. With a cemented use case for Boliecoin, it is bright as day that the crypto will go places in the days and months ahead.